By Eoin Treacy, co-editor, Market Minute
On Monday, the Intergovernmental Panel on Climate Change released their latest report and (surprise, surprise) it’s not good news…
Apparently, we have a decade to change our ways, or catastrophic global warming is inevitable.
This year has already delivered some abnormal weather events, like the sudden floods in Germany and China… wildfires in California, Oregon, Washington, Siberia, Greece, and Turkey… record heat in the Arctic… and sudden frosts in Brazil…
All of these global events have helped to strengthen the climate activists’ argument.
They used to say we needed to keep climate change to within 2 degrees of pre-industrials levels. Today, they’ve reduced it to 1.5%. That implies a massive acceleration in global warming.
The implication is that it’ll require an equally large investment in renewable energy and decarbonization.
Clearly, it sounds expensive.
Governments are planning to throw an incredible amount of money at the renewable energy sector. The dirty secret of the global emissions sector is that China emits more carbon than the U.S. and EU combined every year.
Regardless, that’s not going to stop our government from trying to lead the way in terms of new restrictions on carbon emissions and subsidies for renewables. Maybe China and India can be encouraged to pollute less.
Either way, redeveloping the entire global energy sector is a gargantuan task. We’re talking trillions of dollars in spending and whole sectors that’ll be rationalized to satisfy the dreams of politicians.
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So, I don’t think it matters if you agree with the climate change argument or not… Governments all over the world are about to spend trillions trying to fix the climate. That’s a major investment opportunity.
I find it particularly interesting that the Congressional Budget Office expected to shrink the deficit by $2 trillion next year. That would’ve brought the shortfall back to pre-pandemic levels.
Less than a week later, the Democrat-led government announced a $3.5 trillion spending package. That will blow past the debt limit.
All those Fed officials talking about tapering the pace of bond-buying may have to start walking back their enthusiasm. That’s because the government intends to print trillions in new bonds and the Fed will be expected to buy them. All that new debt will fund President Biden’s economic program, and renewable energy is a big part of that.
If you take a closer look at the renewable energy sector, you’ll find that wind, solar, and uranium stocks have all pulled back over the last few months. They all shot higher in 2020 and were due for some consolidation. That’s now ending.
The announcement of a quicker pace of global warming and new spending plans by government is all the good news they need to rebound.
I favor the Invesco Solar ETF (TAN) because it has both commercial and retail appeal. Personally, the next time I replace my roof I’ll put in solar shingles.
I suspect a lot of people are thinking about doing the same thing.
All the best,
Co-editor, Market Minute
P.S. Last week, I held another one of my presentations where I went over a variety of topics like Ethereum, a big breakthrough for Google, and whether or not the bull market is over. If you missed it, click here to catch up.
And, tune in again this Friday for the next installment.
What are your thoughts on the recent climate change announcement? What other sectors do you anticipate will likely be affected by this news?
Let us know your thoughts – and any questions you have – at [email protected].